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China Supports Industrial Internet Companies to Expand by Going Public

China is pushing its digitally-transformed industries to go public. It’s a long-drawn-out process that has to be done right, not to mention significant costs as the transition could cost the company. However, an enterprise that does an Initial Public Offering (IPO) on a major stock exchange becomes transparent to public scrutiny and thereby could attract more needed capital and top-tier talent.

The Ministry of Industry and Information Technology (MIIT), China’s top agency to oversee the industry, disclosed its work plan recently that pointed out the government’s willingness to give its support to the IPO of notable industrial internet companies. The immediate goal is to drive deeper the digital transformation of the industry, specifically to make the most of the industrial internet.

The industrial internet is what Industry 4.0 is all about. In theory, it is the collaboration of the best of digital technology with physical production. By employing the Internet of Things (IoT), Machine Learning (ML), Artificial Intelligence (AI) and Big Data technologies, for instance, a more holistic approach to production can be made possible. In the end, manufacturers will see “machines that talk to one another” or a more interconnected ecosystem.

Industry 4.0 has been looked upon as the next-level transformation of today’s industries. It is also called the Industrial Internet of Things (IIoT). In such a much more connected environment, tracking the delivery and transport of products is possible. That way, companies can monitor arrival times and manage logistics far more efficiently.

China’s plan is to accelerate the spread of Industry 4.0 and make its industries more capable of greater production and delivery. Specifically, the plan detailed more concentrated efforts to widen the application of 5G technology when it comes to using it for the industrial internet. Thus, it is encouraging the construction of more and more companies that make the most of 5G technology.

According to government data, there are 10 such industrial internet manufacturing enterprises that are set to be built with 5G technology. A trial period should be in order as these companies incorporate Industry 4.0 into their processes.

While an IPO brings a host of advantages to the table, it’s not without risks. It may appear like the go-to step for a large company that is doing well in the market. However, a board member of such a company should weigh the options before voting for his organisation to jump in.

There’s the issue of costs as companies will have to hire a team of consultants, lawyers and investment bankers to make the transition as smooth as possible, a process that could entail a minimum of a year. Plus, all the public scrutiny means board members are accountable to a more stringent set of standards. Lastly, it’s no guarantee that going public is the road to riches.

China’s digital transformation is steadily increasing. It’s apparent in people’s daily lives. A good example here is how people in its cities are enjoying the services of driverless cars that park themselves. With the rate the technology is being adopted, it won’t be surprising that such smart cars would become mainstream.

E-commerce firms are already using the technology. Many of their deliveries today are made via self-driving cars and drones. It’s a great convenience in times of distress. For instance, these driverless vehicles are a shot in the arm for Shanghai while the city was battered by the virus as reported on OpenGov Asia.

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